Microsoft Corporation (MSFT)’s Profits Stung By Sluggish PC Sales And Strong US Dollar

Microsoft Corporation (NASDAQ:MSFT)  reported a drop in profit but in line with expectations as the effects of a strengthened dollar came to bite at the back of sluggish PC sales that hurt Windows software revenue. During an interview on CNBC, FBT Capital Markets senior analyst, Daniel Ives, reiterated that the company is currently undergoing a transition on the cloud and mobile that should provide more growth opportunities going forward.

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Offloading stakes in Microsoft Corporation (NASDAQ:MSFT)  at the current trading margins according to Ives should be out of the picture as the company is poised to gain the much-needed traction in the cloud business.

“This is a little bit of a speed bump as I’d call it.  But ultimately, I think over the next 12 to 18 months this is really the large cap tech play to own relatively to the tradition IT stalwarts. […] I think Nadella is skiing where the park is going. I think this cloud transition is really going to start to work, I can see them do more acquisition,” said Mr. Ives.

 The analyst expects the stock to clock highs of $50 a share, going forward as the company continues to pay more attention to the cloud and business, as well as the ongoing transition on mobile. A growth in PC demand remains the missing link if Microsoft Corporation (NASDAQ:MSFT) is to hit top gear in terms of Windows sales with the expected unveiling of Windows 10 later in the year.

The upcoming Windows 10 should be the best in the recent past according to the analyst, which should help bridge the gap between the enterprise and the consumer with the ongoing transition to the cloud. Hiccups in Japan and China were responsible for a 5% drop in revenue which Ives reiterates did not affect Microsoft Corporation (NASDAQ:MSFT) alone, but also International Business Machines Corp. (NYSE:IBM)

“International Business Machines Corp. (NYSE:IBM) has really been a soft spot for them; the Chinese issues are well documented. They put a lot of resources there that this was going to be one of the growth areas not just on Mobile and on devices, but in terms of what they are seeing on the PC side. […] I think this is something that they need to contend with. They are going to have the right products as well they are going to have to start to find areas of success outside U.S. outside Europe,” said Mr. Ives.

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